Marks & Spencer tipped to post modest recovery in clothing arm

Marks & Spencer is set to shrug off gloomy warnings from rival Next and show a modest recovery in its clothing arm when it posts Christmas figures on Thursday.

The retail bellwether is expected by most analysts to have eked out a 0.2% rise in third-quarter sales across its general merchandise business, which would mark the division’s first sales growth since early 2015.

It would come despite City fears over fashion sales on the high street after Next last week warned over profits following dismal Christmas trading.

Next boss Lord Wolfson sounded the alarm over an “even tougher” 2017 as he said there was no end in sight to the shift away from spending on fashion.

Clive Black, at Shore Capital, said many of the woes at Next are “centred on company rather than market-specific matters”.

The M&S clothing division recovery is expected to be largely down to an exceptionally weak performance a year earlier, when sales slumped by nearly 6%.

Retail analyst Andrew Wade, at Numis Securities, forecast clothing and homewares sales to rise by as much as 1% this Christmas.

He said: “M&S performed so poorly in clothing and homewares through the third quarter last year, we see a good possibility that the division reports a small positive like-for-like outcome this time.”

He added the result could also be helped by more favourable weather and the timing of Christmas, which meant more trading days than a year earlier.

A recovery in the clothing business would be a welcome boost for M&S boss Steve Rowe and his team, even if it proves temporary.

The group will also reveal whether its food halls joined in the better-than-expected performance across the grocery sector over Christmas, following trading cheer from Morrisons and Sainsbury’s.

Most analysts are expecting food sales to fall by 0.4%, but the major chains that have reported so far have beaten forecasts.

The M&S update comes after Mr Rowe announced plans in November to close around 30 UK stores and convert 45 more into food-only shops, while also announcing a retreat from a raft of international markets.

The overhaul will affect around 100 stores as it looks to cut back on clothing and homewares while boosting its Simply Food chain.

Details of the restructure came as it said underlying pre-tax profits fell 18.6% to £231.3 million in the six months to October 1, while bottom-line profits crashed 88.4% to £25.1 million.